After years of renting, Josiah and Katherine Holland are spending their evenings and weekends decorating their new house. They are among a growing number of first-time home buyers who have decided that for them, at least, there’s no better time to purchase a home than now.
“Buying a home is very doable now. If you can rent, you can probably buy,” Josiah said.
The Hollands aren’t alone. At Mortgage Investors Group, one of Tennessee’s largest mortgage lenders, nearly one in five customers is a first-time home buyer. A combination of low interest rates, affordable home prices and rising monthly rents is convincing many first-timers that owning a home makes better financial
sense than renting.
“The desire to own a home is as strong as it’s ever been. People can step out and buy a house for what they would pay in rent. As rents have increased, interest rates and (home) prices have come down,” said Steve Smith, executive vice president with Mortgage Investors Group’s office in Brentwood.
A safe move
Amanda and Quinton Roberts hope to follow in the Hollands’ footsteps. They have let the lease on their town house expire and are negotiating to buy their first house. They have their eye on a newly built home in the Clarksville area.
A brand-new house comes with the assurance that they won’t face expenses for unexpected repairs, Amanda said. The roof, appliances and everything else is new, so it shouldn’t break. And if it does, it’s under warranty.
“We lived in an apartment. Somebody else had lived there. We decided that when we bought, it would be new,” she said. “You buy a used house and you have to fix stuff. I didn’t want to do that.”
For first-time buyers, making an offer on a house is “kind of scary,” said Amanda, who compared it to asking someone out on a date for the first time.
“What do you do if they say ‘no,’ ” she said.
Luckily, first-time buyers have a lot of help available, said Patricia Smith, director of public affairs for the Tennessee Housing Development Agency, a self-supporting government organization that promotes home ownership and the home building and building materials industries.
The Hollands received a THDA grant that paid for the down payment on their home in Nashville’s Inglewood neighborhood. In return, they completed an eight-hour class on successful home ownership.
“They teach you the A to Z of buying a home,” said Josiah, who recently graduated from college and is a middle school teacher in Williamson County. Katherine, also a recent graduate, is beginning a health-care career.
“At this point in our lives, we couldn’t have done it otherwise,” Josiah said.
Help for military
In the Nashville region, qualified first-time buyers can receive THDA assistance purchasing a home worth up to $275,000. There also are income limits. A one- or two-person household can have an annual income up to $79,440. That rises to $92,680 for a three or four-person household, said THDA’s Smith.
THDA’s down payment assistance helps first-time buyers hold onto cash or pay out-of-pocket expenses that they might not have anticipated, she said.
“If they want to keep their money in the bank or buy a water heater,” Smith said.
THDA has set aside funding to help veterans and active-duty military personnel get a half-percent reduction in their mortgage interest when they buy a home.
The average THDA mortgage is $108,000, said Smith, substantially less than the maximum allowable amount.
“We don’t encourage anyone to buy more house than they can afford,” she said, echoing some of the advice first-time buyers hear in their home ownership classes.
With the typical interest rate on a 30-year mortgage hovering around 3.75 percent, home ownership is within reach for more buyers, said Keller Williams agent Aaron Moore, who is helping Amanda and Quinton Roberts find a house. More than 80 percent of his clients have never owned a home before.
“First-time buyers find that for what I’m paying in rent, I can buy a house,” Moore said.